The launch will follow the release of the revised series of the Index of Industrial Production (IIP) on June 1, which will adopt 2022-23 as the new base year.
The proposed ISP, which is seen as a major missing link and has been under development for several years, is expected to provide a clearer picture of short-term trends in services output, ToI’s report (by Shiva) said.
It may be noted that the services sector now accounts for more than half of India’s GDP and supports millions of jobs across industries.
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Officials indicated that the new series will initially carry a two-month lag and is expected to release April data in its first round. The index is also expected to strengthen the indicators used for compiling quarterly estimates, first and second advance estimates, as well as provisional national accounts data.
The ISP will primarily rely on data sourced from the Goods and Services Tax Network, along with administrative information collected from ministries and regulatory agencies.Officials said previous attempts to create such an index faced hurdles due to inadequate data availability. However, wider adoption of technology, digitalisation of administrative databases and the availability of GSTN data have now made it possible to track production and outward supplies across multiple services sectors more effectively.
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At present, analysts largely depend on the HSBC Services Purchasing Managers’ Index (PMI) to assess monthly momentum in the services economy. However, the PMI is a sentiment-based survey that captures whether managers perceive business activity as expanding or contracting and does not directly measure actual levels of economic activity.
The Ministry of Statistics and Programme Implementation recently issued a draft consultation paper detailing the methodology proposed for the ISP and invited stakeholder feedback on the framework.
The draft paper also proposed temporarily excluding the health and education sectors from the index until findings from the annual survey of incorporated service sector enterprises become available. Together, these sectors account for nearly 10% of the services gross value added (GVA).